[Feature] When RaaS Services Rise: Can OP Stack Threaten Cosmos' Moat?

Compiled By: Coinlive
Author: TechFlow

OP Stack is a software stack launched by Layer2 Optimism for modular blockchain modules. When the OP Stack solution was proposed, the market had a mediocre response to this technology.

Ultimately, this was due to a lack of market confidence, as it was in the aftermath of the FTX crash, and Arbitrum had always had the upper hand in the Rollup competition. The launch of OP Stack seemed more like Optimism's self-rescue plan, or more directly, a means for Optimism to enter the market.

This perception persisted until Coinbase announced on February 23 that it was about to launch a Layer2 network Base built on OP Stack.

It seems like there is now a foundation for this pie in the sky idea, and more possibilities have opened up.

OP Stack is an exploration of modular blockchains. Simply put, we can roughly divide blockchains into consensus layers, settlement layers, and execution layers. The consensus layer is further divided into the data availability (DA) layer and the derivation layer. When developers build a blockchain, they need to go through the process of building code from scratch. The function of OP Stack is to deconstruct and recombine these functional layers and provide services to other developers in the form of an API software stack. That is to say, while developers enjoy the ready-made code library of OP Stack, they can also have the flexibility of blockchain in each layer. For example, replacing Ethereum, which is responsible for the DA layer, with Celestia.

Based on OP Stack, various Layer2 will also have their unique characteristics for higher flexibility. For example, Coinbase's Layer2 Base may adopt transaction monitoring and anti-money laundering measures, which will be implemented through a more centralized sorter. Perhaps in the future, on-chain behavior will also be regulated by the US government.

After the Optimism Bedrock upgrade, a concept of "Superchain" will also be introduced. The introduction of Superchain is intended to solve the problem of interoperability between chains, much like Cosmos. Superchain is likely to serve as a hub, and the messaging between Layer2 and Layer2 will be accomplished through this hub. However, its security is implemented through Ethereum, meaning an infinite chain on one bridge.

In addition, it is worth mentioning that OP Stack's Superchain will use a decentralized sequencer to address MEV (miner-extractable value) issues between chains.

From the overall architectural perspective, OP Stack is similar to Cosmos SDK in that they both achieve multi-chain expansion through a hub-like structure. However, OP Stack's advantage lies in its higher degree of customization and the fact that it does not require validator staking to maintain the consensus of the blockchain, which is also why Base does not need to issue new tokens. On the other hand, Cosmos sub-chains need to introduce new validators to maintain the consensus of the blockchain - although Cosmos is trying to address this issue with the introduction of Interchain Security.

In theory, Cosmos' market share will be challenged by OP Stack, but will this be the case in practice?

Developer ecosystem comparison
Cosmos has a first-mover advantage and has already accumulated a certain number of developers. Some super applications, such as dYdX, have started migrating to the Cosmos ecosystem. According to data from Tokenterminal, the number of daily active developers in Cosmos has remained stable over the past year.

However, although OP Stack is just starting to develop, its underlying EVM developer ecosystem cannot be ignored. OP Stack's advantage lies in EVM's market share and market acceptance, and a large market share and market acceptance mean that EVM has a rich developer ecosystem. Like other Layer2s built on top of Ethereum, including those dependent on Ethereum, EVM developers are more willing to adopt the more convenient and flexible OP Stack framework.

Compared to other Layer1s, the ability to build Layer2s, especially in a more convenient way, is a better choice for developers who have faith in decentralization.

Cosmos' Progress
Cosmos is working to address the issues within its ecosystem, such as launching Interchain Security, Interchain Scheduler, and Interchain Allocator. This has also led to dissatisfaction within the Cosmos community with the OP Stack solution, as OP Stack seems more like a peach-picker, absorbing the problems encountered by Cosmos in its development process and launching a more complete solution.

Alt Layer1 vs Ethereum Layer2
In essence, OP Stack is still an extension of Rollup. This means that the blockchain built on OP Stack is still Layer2, where computation and storage are executed off-chain and a large number of transactions are compressed into a single transaction, which is then recorded on the underlying public chain, Ethereum. The security is ultimately provided by Ethereum. As a result, the Layer2 built in this way will lose some autonomy and weaken the demand for token issuance, just like Base, which does not issue tokens. $OP cannot benefit from the growth of OP Stack, and $ETH will be the beneficiary.

On the other hand, Cosmos' Appchains-as-a-Service essentially allows developers to build a true Layer1. Although OP Stack simplifies the process of building a blockchain, its construction ideas still revolve around Ethereum and will be influenced by Ethereum's further upgrades in the future. The Cosmos SDK allows developers to rewrite these default architectures and design blockchains with custom consensus mechanisms, token standards, and smart contract platforms. Layer1 built with Cosmos SDK has greater autonomy.

However, in essence, the launch of OP Stack symbolizes the competition between the Ethereum ecosystem and the Cosmos ecosystem in the direction of modular public chains in the future. The higher expectations for OP Stack Layer2 are to obtain higher scalability and lower fees through Ethereum's subsequent releases of EIP-4844, Proto-Danksharding, and Danksharding.

The launch of OP Stack and the development of Cosmos also confirm the feasibility of "Rollup as a Service" and "Appchains-as-a-Service". At the same time, we cannot ignore the other challengers in this race, such as Avalanche, whose subnet service also has higher customizability. Another example is Celestia, which achieves rapid deployment of blockchains by launching a modular blockchain code library, Rollkit. Cosmos ecosystem subchains can also use Celestia as the consensus layer. This means that, in addition to OP Stack, Celestia will also become one of Cosmos' competitors.